Instructions Prepare condensed divisional income statements for the three divisions, if there were no support department allocations. Using the DuPont formula for return on investment, compute the profit margin, investmen turnover, and return on investment for each division. Round percentages the investme turnover to one decimal place. 3.) Differential analysis involving opportunity costs On July 1, Coastal Distribution Company is considering leasing a building and buying the necessary equipment to operate a public warehouse. Alternatively, the company could use the funds to invest in $740,000 of 5% U.S. Treasury bonds that mature in 14 years. The bonds could be purchased at face value. The following data have been assembled: Cost of equipment Life of equipment Estimated residual value of equipment Yearly costs to operate the warehouse, excluding depreciation of equipment Yearly expected revenues--years 1-7 Yearly expected revenues--years 8-14 $760,000 14 years $85,000 $175,000 $280,000 $240,000 3.) Differential analysis involving opportunity costs On July 1, Coastal Distribution Company is considering leasing a building and buying the necessary equipment to operate a public warehouse. Alternatively, the company could use the funds to invest in $740,000 of 5% U.S. Treasury bonds that mature in 14 years. The bonds could be purchased at face value. The following data have been assembled: Cost of equipment Life of equipment Estimated residual value of equipment Yearly costs to operate the warehouse, excluding depreciation of equipment Yearly expected revenues-years 1-7 Yearly expected revenues-years 8-14 $760,000 14 years $85,000 $175,000 $280,000 $240,000 $200 Presentin Instructions Prepare a differential analysis as of July 1 presenting the proposed operation of the warehouse for the 14 years (Alternative 1) as compared with investing in U.S. Treasury bonds (Alternative 2). Based on the results disclosed by the differential analysis, should the proposal be accepted? If the proposal is accepted, what is the total estimated operating income of the warehouse for the 14 years? Instructions Prepare condensed divisional income statements for the three divisions, if there were no support department allocations. Using the DuPont formula for return on investment, compute the profit margin, investmen turnover, and return on investment for each division. Round percentages the investme turnover to one decimal place. 3.) Differential analysis involving opportunity costs On July 1, Coastal Distribution Company is considering leasing a building and buying the necessary equipment to operate a public warehouse. Alternatively, the company could use the funds to invest in $740,000 of 5% U.S. Treasury bonds that mature in 14 years. The bonds could be purchased at face value. The following data have been assembled: Cost of equipment Life of equipment Estimated residual value of equipment Yearly costs to operate the warehouse, excluding depreciation of equipment Yearly expected revenues--years 1-7 Yearly expected revenues--years 8-14 $760,000 14 years $85,000 $175,000 $280,000 $240,000 3.) Differential analysis involving opportunity costs On July 1, Coastal Distribution Company is considering leasing a building and buying the necessary equipment to operate a public warehouse. Alternatively, the company could use the funds to invest in $740,000 of 5% U.S. Treasury bonds that mature in 14 years. The bonds could be purchased at face value. The following data have been assembled: Cost of equipment Life of equipment Estimated residual value of equipment Yearly costs to operate the warehouse, excluding depreciation of equipment Yearly expected revenues-years 1-7 Yearly expected revenues-years 8-14 $760,000 14 years $85,000 $175,000 $280,000 $240,000 $200 Presentin Instructions Prepare a differential analysis as of July 1 presenting the proposed operation of the warehouse for the 14 years (Alternative 1) as compared with investing in U.S. Treasury bonds (Alternative 2). Based on the results disclosed by the differential analysis, should the proposal be accepted? If the proposal is accepted, what is the total estimated operating income of the warehouse for the 14 years